Calif. Districts Wary in Advance of Tax Vote

California Gov. Jerry Brown discusses his state budget plan during a news conference earlier this year in Sacramento, Calif. Brown is staking much of his budget and political capital on a tax increase that California residents will vote on Nov. 6.

Faced with uncertainty about the fate of a tax-hike initiative on California's ballot this November—and the prospect of deep K-12 funding cuts if it fails—the vast majority of school districts are shying away from budget commitments that could fall apart.

The ballot initiative, which is built into the revenue assumptions in the $91 billion state budget and was signed by Gov. Jerry Brown late last month, includes $47.7 billion in spending on K-12, according to the state's Department of Education. The enacted budget assumes that voters will approve an increase in the state sales tax for all residents by a quarter of a cent and an increase in income taxes on individuals earning $250,000 and more annually.

If approved, the new taxes are projected to provide $6 billion in revenues for fiscal 2013, and over the course of the next four years, would equate to an increase of $2,500 in per-student state funding. (Some of the "new" funding from the higher taxes would actually go to the restoration of deferred money from prior years to schools.)

Rejection of the measure, however, would trigger $6 billion in state funding cuts, about 80 percent of which would be made to K-12 public schools on Jan. 1. Districts would also be authorized to slash the school year by 15 days, from the required minimum of 175 instructional days.

And in what may be an ominous sign for the initiative, California voters rejected a ballot measure in June that would have raised taxes on cigarettes by $1 a pack to pay for cancer research and to discourage smoking.

Fallback Plans

Most California school districts are shying away from budget commitments that could fall apart if a revenue-raising ballot initiative fails in November. Others are banking on passage—and will have to cope if the measure fails. Districts are looking at a variety of approaches to deal with the uncertainty.

SOURCE: California Legislative Analyst's Office

Administrators are grimacing as, in many cases, they plan to lop off days or weeks from their school calendars as one of the few options left for them that will garner major savings.

Tom Armelino, the superintendent of the Shasta County office of education, oversees 26 school districts in the Northern California county. Districts are frustrated since they "almost have to plan two budgets," he said. "This governor is taking a risk, and he's going to the people. He's asking for a new tax, which is never popular, to try to bring money into schools."

The initiative has, in some ways, overshadowed other details of the budget in a state that has endured years of fiscal crisis. Gov. Brown did cut $50 million from child care and preschool for low-income families using his line-item veto, on top of $110 million that legislators cut from child care, according to the California Budget Project's July 2 update.

It is difficult for the public who see schools that are still outwardly functioning "to understand what leaders in school systems are facing, in terms of how to keep this system afloat with dramatically less money than anybody ever imagined, and a higher level of budget uncertainty than anybody ever imagined," said Merill Vargo, the executive director of Pivot Learning Partners, a San Francisco-based organization that consults with school systems on leadership and professional development.

Since 2007, California schools have lost $28 billion in funding, with $18 billion in cuts and $10 billion in deferred spending.

"When you've got this kind of major reduction in funding, there's almost nothing left you can do but shorten the school year," Ms. Vargo said. "It's the last [budget cut] you get to, and at least in some places, this is what folks are down to."

Many districts appear to be cautious about counting revenue from the proposal. A May report from the state's Legislative Analyst Office says that only 11 percent of districts built the projected revenue increase into their budget assumptions. They include the 664,000-student Los Angeles Unified School District, which is assuming $255 million in revenues from the initiative in its $6 billion fiscal 2013 budget.

But 8 percent of districts also said they would have to make cuts midyear if the tax increase is rejected, according to the report. And 89 percent are waiting to see whether the initiative will pass before making any firm commitments for the money in fiscal 2013 or beyond, it says.

Cutting School Days

Beyond the budget issues themselves, the potential cuts in the school calendar would come at a particularly bad time in terms of academic instruction for California, since such reductions would short-circuit first-year implementation of the new Common Core State Standards in English/language arts and math, noted Arun Ramanathan, the executive director of Education Trust-West, a nonprofit advocacy organization.

"The cuts to the school year will impact every family in California. But when you think in particular about high-needs families … their kids are going to have less time to learn content and less time to learn the standards," said Mr. Ramanathan, who previously worked in the Los Angeles and San Diego school districts. Another issue, he said, is "how are they going to take care of their kids? They're supposed to be in school."

In Los Angeles, aside from the possibility that the initiative's rejection could force three instructional weeks to disappear from the calendar, Thomas Waldman, a spokesman for the state's largest district, said he is still unsure exactly how the failure of the tax increase would affect the school system. The district assumed passage of the tax increase in order to allow Superintendent John E. Deasy to preserve smaller student-to-teacher ratios, the spokesman said.

"If there's not passage, obviously like all school districts, we're going to have a lot of scrambling to do," he said.

Even with the assumption of revenues from Gov. Brown's proposed tax increase, the LAUSD has negotiated for all employees to take 10 furlough days next year. If the tax increase fails, the district projects the loss of $738 million in operating funds for fiscal years 2013, 2014, and 2015, and its deficit would grow to $1.97 billion, according to a report from the district.

The situation has done nothing to smooth relations between the state and local governments in California.

In his 17 years working on school budgets, George Landon, an assistant superintendent at the 20,500-student Lake Elsinore Unified School District, said he has never seen state government build a budget based on the premise that voters would approve tax increases. Layoff notices have been given to bus drivers because of transportation funding cuts, and the district plans to have nine furlough days next school year, including five instructional days. Despite those cuts, he still has a $300,000 gap to close for this coming school year by Aug. 15.

"It's really difficult with Sacramento kind of playing their games," Mr. Landon said.

Vol. 31, Issue 36, Pages 20-21

Published in Print: July 18, 2012, as Wary California Districts Hedging Bets in Advance of Tax Vote

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